Local Authorities: Regulatory Services

Baroness Hayter of Kentish Town Excerpts

Thursday 27th June 2013 Grand Committee

[Baroness Hayter of Kentish Town]

My Lords, I think we would all agree that this has been a most valuable debate, and it is on a matter close to my heart. I congratulate my noble friend Lady Crawley not just on bringing this subject to the attention of the House but on bringing the subject to life, and reminding us of the importance of regulatory services.

We probably know that the Minister, in responding, will talk about the valuable work of trading standards but we need the Government to walk the walk, not just talk the talk. As we have heard today, nearly 30% of funding has been lost from consumer protection and, as we heard yesterday, there are more cuts to come. Some services have lost half their income, while some are struggling with just one qualified member of staff. At the same time, consumer disputes and calls to Citizens Advice are at an all-time high of about 1 million a year. Consumer detriment costs consumers about £6.5 billion, yet only £170 million is spent dealing with it. While the Government will try to suggest that responsibility for cutting trading standards rests with local councils, what choice do those councils have in the face of mounting social care bills and ring-fenced education budgets?

Some suggest that the answer, as we have heard, is for more innovation to make efficiencies. That seems to be the Government’s answer to just about every problem. However, there is compelling evidence from the National Audit Office that the unique nature of risks from a business operating across the UK, as opposed to risks originating from the building it occupies, means that something more radical is needed to safeguard consumer protection. We are therefore talking about not just funding but intelligence, structures and powers. Nor can the Government’s localist policies be used to shield or absolve them from their accountability for consumer protection. It is a government remit and there is a responsible Minister. The NAO estimates that nearly £5 billion of consumer detriment occurs across local authority boundaries, meaning that it can never be dealt with by a single local authority. Every local authority must play its part, working together to join up the dots of intelligence before mobilising a team to deal with the mischief and bring the perpetrator to justice.

The OFT estimated that when it led on consumer enforcement it was exposed to £10 million of legal risk at any one time. How many local authority trading standards, or indeed their council members, could possibly put their hands up to that? When investigations largely benefit those outside the area of an individual local authority, coupled with those investigations carrying high levels of risk, it is easy to sympathise with any local council for being wary of taking on the challenge. The result is that we have a patchy framework, a coalition of the willing, and too many consumers are missing out on the protection they need. That is why we need some action.

A stunning return on investment has been demonstrated by the new National Trading Standards Board, which as we have heard is now chaired by my noble friend Lord Harris of Haringey. Last year it dealt with £145 million of consumer fraud, at a cost of only a tenth of that. It is a shining example of how investment pays off, and of what can be achieved by rebalancing local and national resources. We are not calling for a nationalised service, but for the re-engineering of a service with historic roots in local markets and shops, but which must now protect consumers who function in a global economy. Consumers and businesses have changed, and so must the services which police them. The work of the National Trading Standards Board is a taster of what could be achieved if consumer protection was properly resourced and properly empowered.

Finally, I come to the very welcome draft consumer rights Bill, which others have mentioned. I congratulate the Government on this. It represents a step forward for consumer rights. However, as any trading officer will attest, enforcement and the education of consumers about their rights will be crucial. The Bill also contains some confusing messages, as already outlined by my noble friends Lady Crawley and Lord Harris. If they are right, the Government appear to be proposing to reduce the penalty for obstructing an officer when carrying out his or her duty from a level 5 to a level 3 fine. That will incentivise obstructive behaviour, because it will be cheaper to pay the fine for obstructing an officer than to risk a proper penalty.

The other issue that was mentioned is the requirement for officers to serve written notice to traders two days before they carry out inspections. I have only to mention breast implants in France for us to remember that two days notice allowed all the silicone to be removed. We have already heard how unhelpful these issues would be to trading standards. However, I congratulate the Government on there being a draft Bill, and hope that they will rethink this. The issues mentioned would also add to cost and bureaucracy, which I understood the objective was to diminish rather than increase. More than that, they would undermine the very objectives of the trading standards service, which is to protect consumers. We would lose a third of the workforce, with powers diluted and costs increased.

We need to know whether the Government are genuine in putting consumers’ interests above those of business. As the Minister will have been briefed, he well knows that cutting £1 from trading standards costs the economy £6. Exactly how does this help the economy to move from “rescue to recovery”, as the Chancellor articulated yesterday? What will the Government do to ensure that citizens are not caught in a consumer protection postcode lottery? Given that the amendment successfully made to the Enterprise and Regulatory Reform Bill only requires letting agents to join a redress scheme, leaving enforcement to trading standards officers, what thought have the Government given to this vital area of consumer detriment? In the wake of the horsemeat scandal, the biggest consumer fraud of the century, how can the Minister justify a dilution of officers’ powers to protect consumers in the United Kingdom?